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Comment by selmnoo | Hacker News Reader

Very interesting, that Piketty's "Capital in the 21st Century" is introduced in this article:

A lot of other VCs and founders are also digesting Thomas Piketty’s new book, “Capital in the 21st Century.” With more than 200 years of data, it chronicles an inexorable rise in inequality that was punctuated in the middle of the 20th century by the Great Depression and World War II followed by 30 years of evenly-spread prosperity. Ultimately, it advocates a globally-coordinated tax on wealth.

I know that it's taboo on HN to get overly political, but I think because of Piketty's work we should talk about it (particularly, because Piketty's new piece is so groundbreaking [1] and incredibly well-backed with data). What do you guys think of his "global wealth tax" -- tax on capital (including real property), in the context of the new SV riches?

[1]: The book is being received as "the most important economiscs text of the decade" by a lot of high-placed economists, etc.: http://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Cen...

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""How can you dismiss socialism so casually?"

"I've thought a lot about this, actually; it was not a casual remark. I think the fundamental question is not whether the government pays for schools or medicine, but whether you allow people to get rich.

In England in the 1970s, the top income tax rate was 98%. That's what the Beatles' song "Tax Man" is referring to when they say "one for you, nineteen for me."

Any country that makes this choice ends up losing net, because new technology tends to be developed by people trying to make their fortunes. It's too much work for anyone to do for ordinary wages. Smart people might work on sexy projects like fighter planes and space rockets for ordinary wages, but semiconductors or light bulbs or the plumbing of e-commerce probably have to be developed by entrepreneurs. Life in the Soviet Union would have been even poorer if they hadn't had American technologies to copy.

Finland is sometimes given as an example of a prosperous socialist country, but apparently the combined top tax rate is 55%, only 5% higher than in California. So if they seem that much more socialist than the US, it is probably simply because they don't spend so much on their military."

http://paulgraham.com/resay.html

(I know that in the US anything even vaguely leftist gets called "socialism", but Thomas Piketty, the author, is a genuine strong supporter of the French Socialist Party, and the focus of the book is explicitly on government action to prevent anyone from getting 'too' rich. I think it's a fair criticism.)

EDIT: To those not familiar with British history, things got really bad during the 1970s. Inflation peaked at 27%. The government went bankrupt and had to go "cap-in-hand" to the IMF for a bailout. Garbage piled up in the streets because the sanitation workers were on strike. Bodies piled up because the gravediggers were on strike... (http://en.wikipedia.org/wiki/Winter_of_Discontent). I don't want to get into an argument about Thatcher, but everyone at all familiar with the history agrees that the country was in a mess.

And yet England did well; the golden years of British innovation are the '50s and '60s when this policy was in effect. Whereas come Thatcher and the '80s and the lowering of taxes you see the destruction of British industry, ruination of national infrastructure (the railways are still recovering from that era's underinvestment), and even what felt like a cultural collapse.

the golden years of British innovation are the '50s and '60s

The golden years of British innovation where in the 50s and 60s all right but 1850s and 1860s, maybe even earlier. By the end of the WWII Britain was a shade of its former self completely eclipsed by the US. Although to be fair, tax policy probably wasn't the decisive factor.

Not quite so. The trends in the industrial north were already strikingly negative by '79, and the fears of the coal miners in that pre-Thatcher era were important factors in the fall of the Heath and Wilson ministries.

Thats nonsense.

England / the UK is a mess at the moment. They are heavily in debt. They keep on cutting benefits to the poor and allowing the rich to pay even less tax. According to your argument everything should be getting better because of this, but I assure you it is not.

You obviously don't remember the 70s.

Do we have rubbish piling up on the streets, dead people piling up not being buried? Do we have rolling power cuts due to strikes? Are we all on a 3 day week? Massive inflation and interest rates?

The UK is turning the corner after the disastrous spend spend spend! Socialism of the last decade.

The disastrous spending of recent decades has been private spending funded by borrowing not public spending (although arguably the government should have tried to be more counter-cyclical than it was). The recovery happening at the moment is due to borrowing restarting and accelerating and is also the first steps towards the next crisis.

> (although arguably the government should have tried to be more counter-cyclical than it was)

That's a very polite way of acknowledging that the UK government ran a massive deficit-funded spending campaign throughout one of the fattest and longest boom cycle in history.

Public borrowing was small compared to private borrowing, it would have been better to take action to limit bank lending to cool the housing market than to drastically cut public spending. And I don't think many political leaders would have borrowed much less, under the Tories I think both spending and taxes would have been lower which wouldn't have produced better results.

I'm interested to see what's around that corner. What is the average price of a London home at the moment - 12x salary? Foreigners are still flocking in, and the market mania seems to be increasing with sellers increasing prices 7% a month. I find it hard to believe this isn't leading to some sort of catastrophe. This site keeps track of the UK housing market: http://www.housepriceviews.com/

I am not pretending everything is perfect, but economically the UK is projected by the IMF to grow faster than any other developed G7 Economy in 2014; and at twice the rate of the Eurozone [1]

Debt is high, but the key metric of net debt as a proportion of GDP is decelerating and is forecast by the Office of National Statistics to level out over the next few years and be falling within 3-4 years. [2]

The UK has made cuts to social and welfare budgets, but these cuts are actually smaller than across the Eurozone. Social spending has risen faster since 2000 in the UK than anywhere in the OECD. [3]

There are still issues with wealth disparity (poor vs rich and South-east versus the rest of the country), tax avoidance (mainly corporate), and challenges with reforming the welfare state so that benefits are there for the those that genuinely need whilst not creating a disincentive to those that work. However, saying the UK is mess at the moment, is do dismiss the facts.

[1] http://news.sky.com/story/1238991/imf-sees-uk-growth-remaini...

[2] http://www.bbc.co.uk/news/business-25944653

[3] http://www.telegraph.co.uk/news/politics/10574376/Graphic-Br...

Your comments are not very helpful,as you are quoting growth rates from arbitrarily selected starting points.

The main measure of an economy is GDP per capita. Apart from cyclical fluctuations, the main drivers of GDP per capita are are investment and productivity.

In the UK both of these are below that of the major developed economies.

As for the current growth of the economy-all is not well, as there is a large current account deficit, which is being funded by borrowing from overseas and is not sustainable.

The tax rates the rich pay are lower, but the overall percentage of the tax take paid by the rich is higher. The richest 1% paid 20% of total tax in 1997, 24.4% in 2007 and 29.8% now.

The UK competes with many other places for where the rich want to live. France has had a disaster with their recent proposed 75% tax rate.

The same goes for entrepreneurs - would you register your startup in the USA if the tax rates, especially on capital gains were massively higher than elsewhere? It's also a question of VC capital - would they let you.

It's better for the USA to get it's cut of Facebook's success rather than drive Facebook into a tax haven and get nothing.

"It's better for the USA to get it's cut of Facebook's success rather than drive Facebook into a tax haven and get nothing."

And the race top the bottom continues.

yea the race to the bottom pretty much defines human progress. It is a great thing. That is why $100 today can get you what a king could not get 200 years ago.

Actually I think it is technological progress that drives what you have described. Take some things that have remained unchanged in the same time period. The price of land, property or gold for example. $100 will get you a lot less of those.

Wages going down for the majority, while a few get a lot richer is hardly what I would describe as progress.

The percentage of the tax take goes up because the richest 1%'s income has gone up massively while the bottom 90% has stagnated.

"new technology tends to be developed by people trying to make their fortunes"

How about the internet? The web? Nuclear energy? All of this has been payed for by taxpayers.

EDIT: I am getting a couple of down votes, so I am assuming people are asking for some sources. Most of the research, for internet at least, was actually funded by the department of defense [1]

[1] http://www.internetsociety.org/internet/what-internet/histor...

No, some/most of the research underpinning the first iteration of these cherry picked technologies was paid for by the government, but the development of them into the ubiquitous form in which you and I are benefiting from them on a daily basis was purely private capitalist endeavour. Surely there's a role for government in all this, but it doesn't follow that socialism (never mind all the random crazy ideas people call socialism) is a good idea.

It's funny how the idea the fact that government provided some early foundations for the Internet somehow awards them full credit for it, doesn't apply to the private inventions such as electricity and the telephone without which the government couldn't have invented the Internet.

> Surely there's a role for government in all this, but it doesn't follow that socialism (never mind all the random crazy ideas people call socialism) is a good idea.

Who said this? I was merely pointing out that "new" technology, as appeared in the quote I responded to, it actually usually kickstarted by taxpayer money. I am not interested in where it went from there.

> Who said this?

Said what exactly? The comment you were responding to is titled "How can you dismiss socialism so casually?"

> I am not interested in where it went from there.

Well, that's awfully convenient, isn't it? If we only consider technology that's developed by the government it's much easier to reach the desired conclusion.

> No, some/most of the research underpinning the first iteration of these cherry picked technologies was paid for by the government, but the development of them into the ubiquitous form in which you and I are benefiting from them on a daily basis was purely private capitalist endeavour.

First, you're understating the government contribution. DARPA didn't just research network theory. They built a network. TCP/IP was designed under contract. Also, that point undermines the original argument, which is that entrepreneurs are necessary for innovation. Once the technology exists, development is something that can be done with a rate-regulated monopoly. AT&T wired up every person in America under such a regime.

I'm not saying that this would be my preferred model, but its one that works just fine.

This is important to understand: the internet was already the largest computer network in the world -- and very engaging and worthwhile for a smart person -- before the private sector of the economy started to influence it significantly.

For at least a year after I started on the internet in Dec 1991, any use of the internet for "commercial activity" was disallowed (and did not happen enough for a person to notice it). Spam had not been invented yet; the entire marketing profession seemed unaware of the existence of the internet; the main form of promotion I can remember is announcements of academic and technical conferences; it was OK to make a "work wanted" post on Usenet only if you wanted to become an employee ("W-2") -- contractors ("1099") and one-man consulting shops were prohibited from using the internet to look for clients.

Although a few private-sector companies (UUNET for example although started as a non-profit in 1987 became a for-profit in 1989) were influencing the internet at this time, the influence was minor compared to the influence of governments, governmental contractors (notably BBN and Mitre) and universities.

And again, the internet was already very valuable and very able to enrich people's lives -- provided that those people were willing to use command-line interfaces.

SpaceX is being funded with government money, yet it's very much a capitalist enterprise.

Just because government money was involved doesn't mean the government developed the technologies, nor that profit wasn't a prime motive.

Spending your enormous profits on tax-deductible R&D in the name of empire-building sounds a lot more appealing when most of your obscene executive salary or dividend payout would go to the IRS.

That was pretty good incentive to pipeline money to Bell Labs or the PARC: http://www.slate.com/blogs/moneybox/2012/07/24/xerox_parc_an...

And look where that got us.

"new technology tends to be developed by people trying to make their fortunes."

Please don't buy into the propaganda. I think you are confusing invention with smart packaging and marketing what was already developed. None of the technology we see today were bootstrapped by individuals or private investors. As a counter argument I will direct you to this talk.

http://www.ted.com/talks/mariana_mazzucato_government_invest...

This is a false equivalency. There would still be entrepreneurs if our top tax rate was twice as a high as it is now, or more. Everyone wants to get rich, and everyone believes that they need eleventy billion dollars in order to be happy. But most entrepreneurs and inventors make things because they like to make things. Most successful ventures start with a question, "Is X possible?" or "Wouldn't it be cool if...?". Some of the people who ask these questions also put a lot of focus on money because it's a convenient measuring stick for success in our society. This doesn't mean that paying slightly more in taxes would cause them to stop wondering and experimenting, though it might seem that way.

I find it hard to believe that there would be no facebook if Mark Zukcerberg was worth $15B instead of $30B, or no Apple if Steve Jobs had paid a few billion more in taxes. If money is the ultimate goal, then why are so many billionaires joining Bill Gates in giving their fortunes away?

During Eisenhower's time the top tax rate in the US was over 90%. We didn't become the Soviet Union, gravediggers didn't strike and innovation continued. I don't know if a 90% tax rate is necessarily socialist, but it wasn't the end of capitalism either. The idea that higher taxes stifle innovation is unproven and unproductive. If the super rich were willing to pay just 10% more, perhaps the super poor would have the opportunity to hold up their end of the deal as well. This real estate issue and the other symptoms of income inequality could become manageable problems instead of simmering conflicts.

I think I would probably draw the line at 50% ... if more than half of what you bring in is taken away, I just feel that's too much... That said, I would probably tax everyone at 50%, nuke corporate taxes, and ensure laws that ensure disbursements from companies to shareholders (that is then taxed, without exception)... from that, I would reduce military spending, cut most social services, and cut everyone a check for the same amount each month based on the revenues/spending.

Corporate person-hood, and corporate taxes don't really make so much sense.. I'd be in favor of limiting corporations, and pushing for disbursements to the owners... Limiting corporations from holding onto unutilized and under-utilized assets and capitol. Make it work, or give it back to the shareholders/owners.

I think that these things could really simplify legal/tax structures, and reduce a lot of government bureaucracy... Some people just wouldn't work.. more power to them. Some people will want more, and there will be competition in the workforce... I'd also be in favor of either open trade, or trade sanctions with countries that don't have similar environmental protection requirements to our own. Yes, that means that smart phones may double in price, but I think actions like that would help a lot more than simply putting up military bases all over the world.

It sounds so simple to have a flat tax, but actually it hurts lower earners disproprotionately because they are using a higher percentage of their income for living expenses rather than luxury. In other words, 50% of 50,000 per year is more difficult to budget than 50% of 2,000,000 per year.

Plus this whole issue of 'companies returning money to shareholders' is again only favoring the rich. It will be a long time before any significant portion of my income comes from dividends and capital gains. To make money in this way, you have to have a huge amount of capital invested already. Just to prove this point, if you made a very nice 10% per year before taxes on your investments, you would have to have 100,000 invested to make an extra 10,000 per year. If you are only making 50,000 per year, that would take a 20% contribution to your pre-tax retirement account for TEN years before you reached that level of invested capital. Sure, it would happen a little faster because of compounded interest and reinvested earnings, but I think my point is clear.

If you read carefully, parent included a stipend ("cut everyone a check for the same amount each month based on the revenues/spending"). Flat tax plus a stipend produces a progressive overall tax rate.

http://en.wikipedia.org/wiki/Negative_income_tax#Flat_tax_wi...

Edited to add: It's worth noting, though, that you can't produce every possible progressive tax rate curve with this method. It's certainly possible to prefer some curve that is unattainable this way. But a simplistic "a tax flat in dollars is regressive in utility" isn't applicable.

I always liked the basic income plus flat tax combination - simple and fair. Due to the means testing of various aid programs the tax system if often regressive and always confusing for low income earners. Exactly the opposite of what we should all want.

Well, different people mean things that are too different by "fair" to really treat it as an objective quality here without being more specific. But I agree that such a system has appeal.

First off, I mentioned a basic income (not by name, but implied by verbiage). Second The point of companies returning monies to share holders, is to simplify tax/business structures. The income given to shareholders as profit is then taxed at 50%.. not favoring anyone.. it's a straight across the board flat tax + basic income for every adult.

I'm in favor of a much simplified structure, applied evenly, as fairly as possible, and much smaller government needed to operate it. A lot of spending comes down to complicated bureaucracies, reducing those is a big step. Another benefit of a basic income, is it would allow the revocation of a lot of welfare and stimulus programs, and their own layers of corruption and bureaucracy.

I'm also in favor of cutting the overall defense and operations budgets by at least 2/3 ... There's a lot of ways the federal government could be much more effective, and reduce expenditures at the same time.

And although I don't know how much I feel it is the government's place, a baseline healthcare system could even be funded in a much better way than Obamacare. I tend to lean libertarian, but I'm a pragmatist. I just want solutions that are responsible, and have a chance at making things better, while avoiding as much chance for corruption and bureaucracy as possible. Not to mention reducing the footprint of the federal government, and reducing the impact of corporate protectionism along the way.

> Corporate person-hood, and corporate taxes don't really make so much sense.

Corporate personhood (as far as I understand) is required by limited liability, which makes a lot of sense to me. Separating a company's debts from the owners' debts (and preventing creditors from going after the owners of a company when it goes bankrupt) is very encouraging for new and small businesses. The debts of the company become separate from the debts of its owners. It encourages people to start businesses and take loans, not having to worry that they'd lose everything if their startup goes under (at least theoretically).

I mean, corporations should not be able to donate to political lobby groups, and campaigns. If an employee or shareholder wants to put their money in, so be it. Corporations should have very limited power, not treated like a person legally. You can have the protections you speak of without allowing political sway.

OMHO one of the biggest arguments for corporate personhood is they are tax paying entities... if you reduce corporations to only allow shared ownership and limited liability, while also limiting the holding of underutilized assets and capital, it would even out. I'm not talking about liability, I'm talking about holdings, taxes and political sway.

> I mean, corporations should not be able to donate to political lobby groups, and campaigns.

While I agree with the idea itself, I don't think you can prevent that realistically. In the end, it's not "corporations" that donate money, but the people in charge of those corporations. If those people (the CEOs, VPs, board members and so on) want to make a donation, they can always do so privately (and most of them certainly have the money to do it).

Then let them.. and that becomes public record, and a non-living entity isn't directly affecting political sway.

>>I think I would probably draw the line at 50% ... if more than half of what you bring in is taken away, I just feel that's too much...

I feel this is the heart of the issue, that people think of money and wealth as "mine" vs. "not mine." It's the whole American individualism at play, where it's you vs. everyone else, where you getting richer is a Good Thing, even if (or maybe especially if) it increases the gap between you and others.

Whereas a much healthier mindset is "mine" vs. "ours." You have money that belongs to you and you have money that belongs to your community. This community can be a neighborhood, a city, a state or even a country. Once you flip this mental switch, you realize that the taxes you pay are not really taken away from you, but rather shared with everyone in your community (of which you are a part).

True.. but in capitalism, if you earned something, it's yours... if you make two sandwiches for your son, does that mean you have to give one to the community? Why does the same apply to money?

I understand that taxation is necessary. I also understand that people like to keep what they earn. I draw this line at half... and I would draw that same line for the wealthiest (who bend current tax law to pay far less than half) to the poorest, who would recieve a basic income (along with everyone else) to subset the half that they earn and get to keep.

The top tax rates also do not serve as a disincentive to all types of investment and entrepreneurship.

For instance, consider Mark Zuckerberg. By and large, Mr. Zuckerberg will owe his taxes when he decides to cash out. But why should he cash out? An entrepreneur can build a multi-billion-dollar company up from nothing, earn a comfortable salary doing it, and as long as he is reinvesting all of the business's profits and not cashing out, not pay significant taxes!

"but semiconductors or light bulbs or the plumbing of e-commerce probably have to be developed by entrepreneurs."

Steve Blank's "Secret History of Silicon Valley" [1] reveals just how heavily the Silicon and other semiconductors in Silicon Valley depended on DoD funding, and SV likely wouldn't be where it is without that funding. Parenthetically, 'Secret History' is also just plain fun and fascinating to watch.

The plumbing of the internet exists because of DoD's ARPA (now DARPA) project to connect and share expensive computing resources.

Entrepreneurs may be part of the equation, but ignoring the significant government role in the technology we have seems likely to lead to wrong conclusions.

[1] http://steveblank.com/secret-history/ [2] "Where Wizards Stay Up Late: The Origins Of The Internet ", Katie Hafner

This reminds me of the claim that the NIH discovers most drugs in the US.

It is true that the NIH conducts basic research that often identifies biologic targets, but there is a huge difference between discovering a lead compound and actually bringing it to market. That difference is about $1B. That money has to come from somewhere and the free market is a great place to get it.

Just moved back to Sweden from the US and was surprised to see my income tax go down by 4-5%. I feared I had to take a pay cut by 25-30%, but with the lower income tax and 25% pension, I'm actually slightly better off now. The levelling difference is the 25% sales tax on pretty much everything except food and books.

What if the technology sector was exempt, but rent seeking was taxed 99%

That would be a boon to the honorable profession of having rent seeking ventures reclassified as technology.

It's not the military! America is extremely inefficient/bureaucratic in various mainline institutions. Military is %5 of GDP, health care is %17/%18 of GDP. A typical socialized medicine country like finland or canada pays about %11 of GDP for healthcare. If the USA brought health care to match socialized medicine costs, it would pay for the military plus more. Pretty much the majority of the USA's federal budget goes towards social security, medicare and medicaid.

Even though the USA pays the most in the world for it's military, I was surprised how little of the GDP it actually was.

>Finland is sometimes given as an example of a prosperous socialist country

It's poor example considering that Finland is not a socialist country, they have the same capitalistic economy and democratic government that US and most of Europe have.

I don't like the idea of a tax on wealth - it seems like it would discourage savings, as you have to use it or lose it. If I save up a nest egg, my tax bill shouldn't increase as my nest egg increases, eventually reaching an equilibrium where I have to keep working just to keep my savings constant. Much better would be a much higher top marginal tax rate like the one we had pre-Reagan, and including investment gains in that.

I personally think a tax on (unearned) wealth makes a lot more sense than a tax on work / earnings.

> a tax on (unearned) wealth

Doesn't the estate tax fully cover this case?

Including capital gains in regular income taxes _would_ be a tax on wealth, though, wouldn't it? Certainly more so than it is now.

To avoid discouraging savings, the wealth tax could be progressive. The tax on the average citizen's savings is negligible but rentiers pay a substantial portion.

I think an inheritance tax is especially important to prevent the formation of generational wealth.

It would only be a tax on capital gains, not on the principal. And philosophically, why should investment income be treated any differently than income gotten due to effort?

Property tax is a sort of wealth tax. It goes to fund local services that the occupants of that house presumably consume, though.

Inflation + capital gains tax => tax on principle. The actual rate would be low, though.

It's an effective tax on principal if you tax nominal capital gains. If you want it to be a tax on actual "income" in real terms it needs to be a tax on real (i.e. inflation adjusted) capital gains. How much of a tax on principal it is depends on the inflation rate, of course; right now it's not much of one, but back in the 70s it would have been a bigger deal.

You're right, and I think the inflationary portion should be completely tax exempt.

There already is a de facto tax on wealth, inflation.

Only a tax on holding currency, not wealth in general (assets and investments.) And many people argue that is just as bad.

Inflation itself is a tax on holding currency or currency-denominated assets, and that's certainly an important point. The combination of inflation and a capital gains tax would seem to produce an implicit tax on wealth in general, right?

Holding currency and also bonds. Property and shares are pseudo-index-linked, though, I grant you that.

How much are my stocks inflating?

have looked at an S&P 500 5-year chart lately?

Yeah, they deflated. 1 share buys more now instead of less.

It would be somewhat better to move to a progressive consumption tax by making money invested tax deductible but taxing the entire proceeds from the sale of investments.

I think the policy is intended to harm rich people rather than benefit poor people. "I want to see my enemy suffer" rather than "I want to make my side better". That could be done with a basic income or similar policies, and could easily be paid for with normal taxes on income. It would also redistribute wealth over time.

Also see the zero-sum fallacy (http://lesswrong.com/lw/2gd/fight_zerosum_bias/). "Some people being richer necessarily means I am poorer."

I know that it's taboo on HN to get overly political

Not any more it isn't.

Tax on real estate doesn't really work - see England/London: the council tax is simply imposed on the tenants (not even included in rent! has to be paid separately).

Nar, he means a land-value tax, which is raised from time to time in the UK.

Although council tax is paid by tenants (as it's a tax on residents rather than owners) it impacts rents. The burden of council tax is thereby shared by both tenants and landlords.

Two similar apartments on opposite sides of the same street can have significantly different market rents just because they are in different boroughs, and those boroughs have vastly different council taxes. The classic example in London used to be Wandsworth vs. Lambeth.

Council tax, although based on properties, is meant to be a tax on residents, to put towards local services like police and rubbish collection. It was created after a previous tax (dubbed the 'poll tax'), which taxed each individual, regardless of the size of their abode, caused protests.

Window tax[0] also does not work. Driving around the country you will see houses with broken out or boarded up windows so the owners didn't have to pay the tax. The tax was repealed in 1851 but the damage from it can still be seen.

[0] http://en.wikipedia.org/wiki/Window_tax

Why is inequality bad?

Because some people want to pretend that a village idiot is as valuable as an Einstein to society.

We are all drastically more wealthy than our parents and grandparents. We have it far better. But for socialists, this is not enough. They despise "inequality" and wealth.

You have it all mixed up, my friend.

Some people want to think that a village idiot doesn't deserve to live a miserable life because he is a village idiot.

You're certainly pulling a lot of strawmen here. Come to think of it, almost reminds me of Fox News. They have a habit of demonizing the other group, just to make themselves feel better.

> They have a habit of demonizing the other group, just to make themselves feel better.

Thank you for being the better person and not joining in.

Care to point out where exactly in my reply it was that I was demonizing him? I was drawing parallels with a news outlet that has a habit of engaging into similar misrepresentations of situations.

You're not demonising him as such, you're grossly misrepresenting what he wrote, presumably to further your own agenda.

The idea that he would think that a village idiot deserves to live a miserable life is entirely in your head, and quite at odds with the second paragraph of his comment.

Except that's not what I'm doing at all.

I was trying to say that the inequality and "hatred" towards inequality and wealth(both claims unsubstantiated, with emotionally charged language)he is attributing to "socialists"(used as almost a slur in his text, also, wrong, social democracies are the wealthiest systems around) is in his head. You are the one misrepresenting my argument.

And just because we have it "better", doesn't mean everyone has at least a reasonable standard of living. Einstein should be earning a lot more, but a village idiot also deserves to not live in dire poverty.

the inequality is not the problem, it's that when one person does not have enough because another has too much.

people pretend that wealth does not increase the cost of living for the poor, but it does. And the poor should not be penalized for this.

Even the village idiot should have a place to sleep, though the very valuable Einstein bought all the houses.

"We are all drastically more wealthy than our parents and grandparents." I doubt that is true based on inflation adjusted income. True, due to progress in science and technology, you have better medical care, faster computers, cars with more horsepower and Flatscreen TV panels.

But on inflation adjusted income, job opportunities, and retirement age and social security benefits the baby boomer generation was likely the peak. Trust me, the likelihood that we are just going downhill from now is quite high.

>They despise "inequality" and wealth. Maybe. I despise Kim Il Song. He is wealthy and his country has inequality.

That isn't to say we couldn't fix it, but we aren't making any efforts to. Hopefully the social instability eventually leads to a negative income tax.

"We are all drastically more wealthy than our parents and grandparents. We have it far better. But for socialists, this is not enough. They despise "inequality" and wealth."

Only if by 'we' to mean the top 20% of American society.

The median worker's wages have been essentially stagnant since 1970: http://www.nytimes.com/imagepages/2013/01/13/opinion/13green...

Moreover, inflation has been uneven: food (including in restaurants) and electronics have plummeted, but the costs of education and healthcare have skyrocketed, and housing has skyrocketed in areas with good job opportunities. It's easy to cut back on new electronics and restaurants, but a lot harder to cut back on housing and healthcare. Cutting back in education gets your stuck in a poverty trap.

So things don't necessarily look so bright for the median worker, especially after 6 years of persistently high unemployment.

I can't dig up a source for that part right now, but it's out there in the CPI statistics.

"The median worker's wages have been essentially stagnant since 1970"

This kind of language is exactly why you think only 20% of Americans are wealthier than our parents and grandparents. Money ≠ wealth. Compare the number of people today who have access to washers, dryers, irons, microwaves, a kitchen, cars, cell phones, and so on to previous generations. Even if wages have remained stagnant the average standard of living is almost always increasing. You can even live in an apartment, own many or all of those items I listed, and still be classified as living in conditions of poverty.

I'm not saying poverty doesn't exist. But I am saying the definition of poverty is constantly being adjusted because humans are so great at creating more wealth. Instead of an absolute metric for poverty or a standard of living, we use a subjective one that changes as humans acquire more wealth.

If you haven't already, I'd highly recommend Paul Graham's essay "How to Make Wealth"[1]. He covers this subject very well.

[1] http://www.paulgraham.com/wealth.html

"The Price of Inequality: How Today's Divided Society Endangers Our Future " is a book by Nobel laureate, Joseph Stiglitz.

For tl;dr of that book, by the same author, is here: http://www.vanityfair.com/society/features/2011/05/top-one-p...

Because people think its bad, and it feels unfair. People don't need any better reason to try to address it.

Fundamentally, wealth can only be created against the backdrop of social order. If you gave Zuck $10 million, far more capital then he started Facebook with, and sent him to Somalia, he would not be a billionaire today. He would've been killed and his money taken. Any business he built would've been taken from him. Because he's not skilled in war, and without social order that's the only skill that matters.

Each person equally contributes to the social order, and therefore each person has equal say in the structure of that society. That's the basis for liberal democracy. If people feel that inequality undermines the social order, they are entitled to do something about it.

If people feel that inequality undermines the social order, they are entitled to do something about it.

Sure. But if they're proposing cures worse than the disease, we should try to talk them out of it, not just play on their feelings of "unfairness" to win political battles.

Inequality is the offspring of transcendence. I guess it's human nature to be jealous if superiority, hell I get jealous of friends, but most of them deserve what they have. People like to pick on the rich kids as the pinnacle of inequality.

Because when money can buy influence (in forms of lobbying and propoganda), economic inequality turns into political inequality.

Interesting.

- What other solutions to the problem of wealth being used for political influence have been proposed?

- Would lobbying/fundraising reform be a better focus, rather than attempting to make everyone, regardless of their contribution to the economy, have equal amounts of wealth?

- When was the last time nationwide wealth equality was proposed? What were the results? What about previously? What about before that?

I'd like to see all taxes replaced by a wealth "tax" in the form of a voluntary--not coerced--payment to the state for the service of recognizing and protecting one's ownership of a piece of property. Payment would be encouraged by the fact that if an individual failed to pay the tax for some property, someone else could take it from them, pay the tax, and become the legally recognized owner, leaving the original possessor with no legal recourse.

And you see no coercion in this ill-conceived scheme? "This tax is 'voluntary', but if you don't pay it someone will certainly come along and take your property from you." What world do you live in exactly?

That kind of concept would work with enough mobility to just leave states you disapprove of. I like to think a huge amount of political inertia in the last 30 years has been due to the lack of any new frontiers to settle. And it is hard to voluntarily withdraw from a state if that also means you have to somehow get accepted into another one, since almost every square inch of habitable land on Earth is state controlled, even Antarctica.

So you literally want to make rent-seeking the main means of accumulating wealth?

This is a very strange economic theory you've got going here.

This comment would benefit from some elaboration (perhaps in place of some snark).

This is similar to Henry George's philosophy:

http://en.wikipedia.org/wiki/Georgism

There's a foundation of some sort in San Francisco that introduced it to me. It's a quite interesting idea. The TLDR is capitalism for what you produce, and socialism for natural resources.

I'd like to see it tried out somewhere if it hasn't been already.

Ah, the good old days of feudalism. When the only rich people were the ones with private soldiery to protect their assets. Everyone was better off when we all had our freedom, eh? Or at least, some people were better off, the vast majority died in squalor, unable to protect what was theirs from the local tyrant/"noble".

To provide a counterpoint: We already exist in the society you describe. You can choose to not pay your taxes and the government won't protect your assets from being seized. Now logically, under your system the person with the greatest military might would be able to seize your assets and defend them him/herself (or pay taxes). However, as the entity with the biggest military might will always be the government, ipso facto we have exactly the same situation as we do under the current law, where the government will start seizing assets if you don't pay your taxes...

The only alternative in a might-makes-right kind of libertarian society, is that individual entities (rich people/corporations/etc) start gathering enough military might to challenge the government and hence keep their tax money to themselves.

So best case scenario, we end up with a detente where the government and the hypothetical powerful force agree not to fight. Due to economies of scale, I'd be willing to bet that the cost of maintaining such a force is waaayyyy more than any taxes levied. Given that this force also gives the owner the ability to tell the government to go away, they'll have effectively declared independence and started their own little dictatorship (whether corporate or otherwise). The only difference is that nobody gets to vote for the new corporate overlords. They just have to obey or leave (until there's nowhere to flee to). This kind of libertarianism is better called neo-feudalism.

Worst case scenario, we have regular open warfare in our own back yards. What a great society to live in, where we're all just trying to stab each other in the back. Progress and civilization indeed...

Therefore the right of the government to enforce taxation for the betterment of society as a whole is absolutely essential to having a "civilization" at all. Those who cannot remember the past are condemned to repeat it.

/rant over :p

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